Tabs

Discussing issues that The United States face both foreign and domestic. A Non-partisan viewpoint where we believe in right and wrong not right and left, hopefully forming a more UNITED States of America.

Saturday, October 10, 2009

On Friday, Larry Kudlow wrote an article discussing the US Dollar. In his article, he writes: "We know that gold is soaring.

And we know the dollar is slumping. But, did you know that year-to-date, while the S&P 500 is up 18 percent—a great showing no doubt—gold is up even more.

The precious metal is up 21 percent. In other words, measured in true, gold-backed purchasing power, stocks have really done nothing this year. Zip. It is most disappointing... What we’re seeing right now is pretty close to what we witnessed in the 1970s—the rise in gold and inflation really cuts into the stock market.

So what’s the way out?

Well for starters, we need a stable dollar to stop inflationary pressures. And we also need lower tax rates to spur the economy, help it grow, and reduce unemployment."

He also goes on to mention, "In addition, the Treasury ought to get out there and buy these unwanted dollars in the marketplace. Just go out there and bid for them. And they need to stop printing so much debt from Congress. All this massive spending and borrowing is killing us. We need to be slashing tax rates on large and small businesses. There’s just no better place to begin job creation."

I agree with Mr. Kudlow. With gold at its highest rate ever and considering that The Federal Reserve has DOUBLED the amount of US Dollars in circulation in one year, clearly inflation is coming.

This video was aired back in January, so the amount of money in circulation now is even higher. However, the money that The Federal Reserve printed approximately one year ago is just now starting to enter the market.

Two other nations in recent history have/had major inflation. One was the Weimar Republic (Germany) after World War I. According to PBS around 1920 "Milk went from 7 Marks per liter to 16." After 1920 "The printing presses ran, and once they began to run, they were hard to stop. The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks....When the 1,000-billion Mark note came out, few bothered to collect the change when they spent it. By November 1923, with one dollar equal to one trillion Marks, the breakdown was complete. The currency had lost meaning."

The Germans printed more and more money without it being backed by gold, and destroyed their own currency. The other example is Zimbabwe. I was in Southern Africa this summer, mainly in South Africa, however I was near the border with Zimbabwe. I was given a legal tender of 50 billion Zimbabwe-Dollars. You need 100 billion Zimbabwe-Dollars to buy a soda. While I was there, I was told the Zimbabwe-Dollar collapsed because of inflation (and printing money) and Zimbabwe has since abandoned the currency.

Since 1973, our currency has not been backed by gold, and since we are printing money without anything that is backing it up, we are going to have inflation, as Mr. Kudlow mentions. People are trusting gold more than the US Dollar, this is why it is over $1,000 dollars an ounce. The only way we can stop this, before we go down the same path as the Weimar Republic or Zimbabwe, is to create jobs. The way to accomplish this is to lower taxes for businesses and make it lucrative for companies to be here.

Other nations are showing concerns about the U.S. Dollar, as well, our national debt, which is about 12 Trillion Dollars. Last Tuesday, The Independent Newspaper reported "Gulf Arab Nations are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar."

If the World thinks the dollar is no longer "the standard" when it comes to currencies, then we may have tough financial times ahead of us, and a new financial crisis, much worse than what we experienced a year ago.

If we don't stop printing more and more money, and unemployment keeps rising; prepare for massive inflation and a possibly a depression. I hope that I am wrong and that President Obama, along with the rest of our Government and The Federal Reserve, can solve these issues by creating new jobs, reducing unemployment numbers, and stopping our national debt from rising.

Christian

Note: this Article was made for one of my classes in school where we had to respond to an article.

About Me

In case if you were wondering, CREN, are my initials and I decided to make that my website name. I have been interested in politics since the close election in 2000 with the tight race between George W. Bush and Al Gore. Since then I have and still remain interested in the studies of U.S. History and Political Science. I would consider myself a conservative however I'm not affiliated with any party as I am sick of the corruption in both the Democratic and Republican parties. They are taking us down the same path eventually will result in the destruction our nation. I believe in the politics of right and wrong not right and left. George Washington refused to be part of a political party because he thought a 2 party system (then the Federalist or Democrat-Republican parties at that time) would ultimately destroy our nation.
I'm a writer for several newspapers across America and Canada, and also work for political organizations.
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